Uganda: Budget Does Not Fully Align With NDP Two Priorities

This financial year 2019/20 is the fifth and final year of implementing the second National Development Plan (NDP II). NDPII was designed to usher Uganda into middle income status with a per capita GDP of $1,039 or 3.8m by 2020.

As the end of the second National Development Plan (NDP11) draws nearer, we assess whether Uganda's budget is in line with NDPII. The second National Development Plan is expected to end by June 2020.

Currently, sources of economic growth, finance, and development have come to the spotlight of the National Planning Authority, aligning the development agenda to the NDPs with each having a five-year period before another one is designed.

To implement the National Development Plans (NDPs), Section 13(6) of the Public Finance Management Act, 2015 provided that the annual budget shall be consistent with the NDP, the Charter of Fiscal Responsibility (CFR) and the National Budget Framework Paper.

The National Planning Authority, under Section 13 (7), is also required to issue a Certificate of Compliance of the annual budget of the previous financial year to accompany the annual budget for the next financial year.

The Certificate of Compliance is expected to ensure that the annual budgets are aligned to the achieving Vision 2040 through the NDPs.

The Certificate of Compliance is a requirement under the Public Finance and Management Act (PFMA) 2015, Section 13 (7). This aims at ensuring that the National Budget, comprising the sector, MDA and Local Government (LG) budgets focus on implementing the National Development Plans (NDPs).

In the Certificate of Compliance for the annual budget FY2018/19 of NDP II, after four years, there has been improvement in alignment of the annual budget to NDP.

"There is improvement in compliance at all levels. The FY 2018/19 Annual Budget is 60.0 per cent compliant compared to 54.0 per cent in FY2017/18," said National Planning Authority said in assessment report 2019.

NPA added: "Macro level compliance improved from 41.9 per cent, in FY2018/19 to 54.1 per cent, national level from 59.3 per cent to 62.8 per cent, sector level from 53.2 per cent to 58.1 per cent, and Local Government Level from 62.2 per cent to 66.4 per cent."

NPA said Gross Domestic Product (GDP) growth has recovered in the previous year, towards NDPII average annual target of 6.8 per cent. However, it is not high enough to lead the economy into the lower middle income status by 2020. The projected GDP out turn at 6.1 per cent by the end of FY2018/19 is below NDPII target," NPA stated in the Certificate of Compliance for the annual budget FY2018/19.

With the current GDP per capita of $757 (about Shs2.8 million), it is projected that Uganda will attain the projected 2020 figure of US$1,039 by 2025.

"The country will not achieve the middle-income target by 2020. After three and a half years (FY2015/16-Mid FY2018/19) of implementing the NDPII, on average the annual budget expenditure is 81 per cent of the NDPII planned expenditures for this period. This situation is worse for the NDPII priority sectors that have spent only 59 per cent of the NDPII planned expenditure. The NDP priority sectors of Energy, Works and Transport, Tourism, and Health have spent on average 22.0, 65.5, 57.1 and 60.1 per cent respectively, of what had been planned in NDPII," said NPA.

National Planning Authority further stated that on the contrary, some non-priority sectors' expenditure outturns have been significantly above the NDPII planned levels.

"This is the case for Legislature and Accountability, Defense and security, Social Development, and JLOS whose annual budget expenditure outturns have been on average 47.6, 11.6, 67.7 and 7.6 per cent above the planned targets," NPA indicated in the annual Certificate of Compliance," said NPA.

The NDP two mid-term review noted that the institutional frameworks are adequate for implementation of the NDP two. However, there is capacity limitation of lead financing institutions.

However, Uganda, according to the NDP two mid-term review, has obtained substantive external assistance to the tune of 31.6 per cent of the total budget during the first three years on NDP two.

The annual budget did not fully align with NDP two priorities, it did not translate into sector specific interventions.

In an interview shortly after the fifth meeting on third NDP plan last week, Dr Joseph Muvawala, NPA's executive director, said compliance is improving while implementation of projects remains slow.

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